Equity markets are in the red today as dealers are still worried about the trade standoff between the US and China. The fact that Washington DC has effectively blocked Huawei from the US market is likely to drag out the trade dispute, and the prospect of a quick solution seems slim. Today’s move lower must be taken in the context of the rally in last week’s latter half.
Ryanair (LON:RYA) shares have sold-off this morning after the company reported a 29% fall in annual profit after tax, and it issued a disappointing forecast. The group expects next year’s full-year profit to be between €750 million and €950 million, and while analysts were expecting €977 million. Higher oil prices and uncertainty has hurt the travel sector as a whole, and Michael O’Leary, the Ryanair CEO, criticised the ‘attritional’ fare wars for the sector’s underperformance.
The airline sector is learning the hard way that price wars only benefit customers, and not shareholders.
Foxtons (LON:FOXT) warned that sales volumes were at ‘record’ lows in terms of sales volumes during the first-quarter. The London-focused estate agent cited Brexit uncertainty for the bleak update, and it is worth noting that London property prices have been overstretched for some time, and there has been some evidence of prices cooling. The firm confirmed that revenue in the first three months slipped by 2.85% on an annual basis, and it anticipated the environment to remain challenging.
BP (LON:BP) and Royal Dutch Shell (LON:RDSa) shares are higher today as the underlying oil market has rallied after Saudi Arabia indicated that OPEC are in favour of continuing the production cuts. Royal Dutch Shell is the bigger of the two companies, and its share price hit its highest level since late October, and that highlights the bullish sentiment.
Low & Bonar (LON:LWB) shares dropped to an all-time low after the company issued a profit warning and announced the departure of the CEO, Philip de Klerk. The company won’t be looking for a replacement just yet, and the turnaround plan is not going as quickly as hoped. The lack of leadership has added to the sour sentiment.
The US dollar has given back a little ground after a positive run last week, but overall volatility is low, and there has been little movement in EUR/USD and GBP/USD. We are not expecting any major economic announcements today so currency markets are likely to be subdued.
Nordson (NASDAQ:NDSN) will be in focus today as the company will release its second-quarter results. The group blamed adverse currency movements and the impact of acquisitions for the 10% fall in first-quarter sales on an annual basis. Trade tensions between the US and China has prompted order cancellations at the firm, and given the current environment, the group is likely to remain in the spotlight.
We are expecting the Dow Jones to open 34 points lower at 25,730 and we are calling the S&P 500 down 3 points at 2,856.
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